International Business Times (IBT)By SHANE CROUCHERThursday, May 09, 2013

The UK government's Minister for Africa has warned that Britain must not miss the opportunity to invest early in the rapidly-rising frontier market.

Speaking at the first ever UK-Djibouti trade and investment forum in London, Minister for Africa Mark Simmonds said: "it is my ambition to tie the UK and Djibouti together by creating significant economic and trade links between our two countries.

"Not just to drive economic development, economic growth, and sustainable job creation in Djibouti, but to help UK companies grow, expand, and deliver financial returns to assist with our own UK economic recovery as well."

The forum was attended by the small African state's president, finance minister, foreign affairs minister, and central bank governor, among other senior delegates from politics and business.

Djibouti is a strategically important country located on the eastern Horn of Africa, sharing borders with Eritrea, Ethiopia, and Somalia. It has a population of around 800,000, with unemployment at 45%. The World Bank estimates that around 45% of Djiboutians live in poverty, though others put this figure as high as 75%.

Healthcare, education and water are all major issues for the Djiboutian people, many of who do not have sufficient access to any of these services.

Its economy is primarily services based and is heavily reliant on its geographical position at the mouth of the red sea. There is a significant and high-tech port in Djibouti, which sees almost two-thirds of the world's commercial shipping fleet pass through.

There are also a number of military bases in Djibouti, including the US Army. The country is seen as an ally of the west in counter-terrorism and piracy.

Djibouti wants to focus on domestic renewable energy as it currently imports much of its resources. The country's ministers are vying for foreign investment in energy, particularly in geothermal, wind, and solar power.

Financial services also play a role in the economy.

Djibouti is trying to attract finance firms with its lack of currency controls and free movement of capital. It also allows the free repatriation of profits and treats domestic and foreign businesses as equals.

Corruption is a concern in Djibouti and a consideration for would-be foreign investors. The Djiboutian government insists it is working hard to combat corruption and is in the process of establishing a new commercial court in the country.

The World Bank's rankings for ease of doing business places Djibouti 171 out of 185 when compared with other countries across the globe. It is 181 out of 185 for protecting investors.

"Our vision for the future of Djibouti is one of a diversified economy with a robust private sector as an engine of growth which then brings about the necessary socio-economic transformation that would make our country a prosperous emerging market," Djiboutian president Ismail Omar Guelleh told the trade forum's delegates.

Political instability

As British and Djiboutian politicians and business leaders talked trade inside the trade conference at the City of London's Drapers' Hall, a group of pro-democracy protestors gathered outside to demand the release of political prisoners held in the African state.

They were calling for political reforms and democracy, echoing past accusations that the incumbent government - which holds all the seats in parliament - committed electoral fraud.

President Guelleh altered the constitution to allow him a third term in office.

"He said many people wanted it, but we never wanted it," said one Djiboutian protester outside of Drapers' Hall, who said he was the nephew of imprisoned opposition leader Daher Ahmed Farah and living in exile.

"We need more education and free opinions. We need more international people who are in Djibouti to make changes and to talk about the reality of what is happening in Djibouti."

He said Djibouti needs investment but then also added that investors were morally obliged to demand democratic reforms for the benefit of ordinary Djiboutians.

Djibouti saw demonstrations arise from the Arab Spring in 2011, but protesters were met with force from the police, who rained down batons and tear gas to quell the unrest

Abdourahman Boreh, a former chairman of the Djibouti Chamber of Commerce, told IBTimes UK in a recent interview that Djibouti people "are looking for change after 37 years of single-party rule in the country".

"We need a government with proper accountability, clear in balance, which maintains stability and peace," he said.

"If the government deprives the population of that and cheats at the elections, people will revolt," adding that vote-rigging was a "national sport".

Boreh, a 51-year-old businessman, fled Djibouti in 2005. He fears imprisonment and torture if he were to return.

"I was critical all the time. In the country there are people who are without electricity and water. There are people dying from hunger," he said.

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